Federal Law in the United Arab Emirates - Research Paper Example

? Federal Law in the United Arab Emirates BUS 104: Introduction to Business Law The United Arab Emirates have travelled a long way since the creation of their federation. The federation has assisted the Emirates in making a big leap, especially in terms of economic stability that they have achieved at present. The creation of the federation and all the activities it has made since then has legal basis or framework. This legal basis is the federal law. The federal laws are laws which are proposed, amended, approved and promulgated throughout all the federal states, which in the case of UAE are seven emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain). These federal rules are made to ensure that all people of the federation abide by the standards set and deemed appropriate for public good and national betterment in all terms by the officiating bodies of the seven Emirates through their officials. This paper will discuss within its context the creation of the UAE federation, the constitution, the federal laws and the creation of federal business laws that already exist within UAE. Key words: federal state, federal law, constitution, business law Federal Law in the United Arab Emirates The United Arab Emirates: Starting Point The UAE is a federation of seven Emirates comprising Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. It was formed on the 2nd of December 1971 (Latham & Watkins LLP, 2011, p. 1). The UAE federal constitution was adopted and accepted in 1996. It ensures the allocation of powers between the federal government and the government of each Emirate. It is one of the largerst countries in the Gulf with a land area that extends to 83,000 square kilometers and a population of 2.6 million (Gulf Law, 2011). Ethnicities that comprise the total population of the United Arab Emirates are: Indians with a total census of 1.75 million, Pakistani with 1.25 million counts, Bangladeshi at a rate of 500,000, other inhabitants of Asian origin amount to one million according to the census, European and African comprising 500,000, while the population of Emirati amounts to 890,000. Majority of the people in UAE are Muslims at the rate of 96% compared to the Hindu and Christian sects present in the country. The official language is Arabic though English, Hindi, Urdu, Bengali are also used widely (U. S. Department of State, Bureau of Near Eastern Affairs, 2011). The Government There is still an independent type of governance in each Emirate since the UAE is a loose federation of seven Emirates with its own ruler in each of them. Under the provisional constitution of 1971, each Emirate controls its own activities and reserves considerable powers including control over mineral rights, such as oil and gas, as well as revenues. But over time the federal powers have developed slowly and the constitution has established set of rules under the creation of President as the chief of state and Vice President as second of rule, each having a fixed term of 5 year service. Other members of the government includes: a Council of Ministers, led by a Prime Minister as the head of the government; a supreme council of rulers; and a Federal National Council of 40 members wherein 20 members are appointed by the Emirate rulers and other half of 20 members are elected through an electorate by the rulers of each emirate (U.S. Department of State, Bureau on Near Eastern Affairs, 2011). Within a remarkably short span of time since the creation of the federation, the United Arab Emirates managed to create a stable country with a booming economy based on free trade. Today the economic status of UAE has earned it a reputation as one of the leading economic icons in the Middle East. This is one of the main reasons why lots of people and business builders and investors thrive to work or build businesses within boundaries of the Federation. The reputation of the Emirates as a free trade area was enhanced with rapidly developing free zones and the oil production that helped to maintain the development momentum (Gulf Law, 2011). The Constitution: Federal or Emirate? As in every nation, the constitution is the legal framework for the federation and is the basis of all laws and legislation promulgated at a federal and Emirate level. The constitution was formulated to explain the main rules of the political and constitutional organization of the state even the creation of the federation and the purpose behind it. It has also elaborated on the major social and economic pillars of federation and stressed public rights, responsibilities and freedoms. It has highlighted federal authorities, organized issuance of federal legislation and the competent authorities as well. Most importantly, it has also dealt with financial affairs of the federation, armed and security forces provisions and legislative, executive and international jurisdictions between the federation and member emirates (UAE Ministry of State for Federal National Council Affairs, 2012). The constitution and the federal law draw a clear line of the legalities within the federation. It will make sure that no issues of injustice within the different Emirates will govern and favor one but it makes sure justice within the federation is set and none shall be excluded. The federal government has exclusive authority in various substantive matters among the federation, such as in laws and regulations regarding foreign policy, defense and security. Such great influence of the federal government over the Emirates can be experienced over the federal state in such a way that all the legislations passed at a federal level has dominance over the local laws of each Emirate (Latham & Watkins LLP, 2011, p. 1). The local government of each Emirate is not at all powerless of course because under Article 113 of the federal constitution, each Emirate has all the power to regulate all local matters which are not subject to federal legislation (Latham & Watkins LLP, 2011, p. 1). These are matters which are not expressly reserved in the constitution to the federal union, such federal matters are foreign affairs, defense and health affairs. The governments of each individual Emirate have considerable powers to regulate the state’s own activities they deemed necessary to achieve economic and state stability such as commercial activities, issue trade licenses and effect the incorporation of corporate entities to the extent that such activity is not already regulated under federal legislation (Latham & Watkins LLP, 2011, p. 1). Though this might be confusing to some because there could be issues of conflict between federal law and law of the emirate but as stated in the constitution during those instances the federal law prevail all other emirate rules. Free zones break the barriers of uniformity of the UAE judicial system among the emirates. Dubai and Ras Al Khaimah are the only two Emirates that do not submit to a federal court system because both have independent court systems. This means that all of the Emirates follow uniformly similar rules of civil procedure and evidence, and trials are decided by a single judge or a panel of three judges. On the contrary some of the free zones do not follow the trail federal court since they have their own judicial systems, thus, their own rules of civil procedure and evidence (Latham & Watkins LLP, 2011, p. 1). Free zones: Opening the federation Building free zones is a strategy of the United Arab Emirates to open the federation in the globally competitive economic structure. The UAE federal constitution under its federal law permits each Emirate to set up “free zones” for general or industry-specific activities. The purpose of free zones is to encourage foreign direct investment into the UAE that could further boost the economic status of the country. Free zones are authorized to enact their own laws and regulations in specific areas, which in some cases override federal and Emirate law on the subject matter. For example, the Dubai International Financial Centre which is a financial free zone within Dubai, has its own body of law, including corporate law, contracts law and employment law, as well as its own court system (Latham & Watkins LLP, 2011, p. 1). Free zone entities are not generally required to have any UAE nationals as owners. This contrasts with most companies incorporated in the UAE outside of the free zones, where UAE nationals are typically required to own at least 51 percent of the company’s capital (Latham & Watkins LLP, 2011, p. 1). This opening of the federation into foreign investments within its premises therefore have added to the stability of the federation in terms of economic stability but all these requires set of rules and regulations in the form of laws to set the line of legality within and outside of the zone. Federal Law and the Business World: A Mutual Understanding The Federal law is the totality of the laws passed by the federal government aimed at setting equality among the people covered. The federal government is the government that runs the whole activities of the country in deciding what path to take in terms of its activities such as national economy, foreign affairs and national defense. It also governs the trade it makes among other countries. Federal law indicates the laws that govern the whole of the country, and may be created and upheld by one or more departments within the federal government. The UAE are not considered neither as a republic nor a monarchy despite the fact that its laws stipulate that UAE have a constitution and a president. Rather it is a federation of seven monarchies governed by emirs who are considered having absolute power within the borders of their Emirates (Arab Laws World). In the context of the federal law of UAE the President is considered the head of the state and the Prime Minister as the head of government. Although these leaders are chosen by the Supreme Council according to UAE laws their political position is actually acquire hereditarily. Like always the emir of Abu Dhabi is the president, while the emir of Dubai is prime minister. Also, the prime minister is usually vice president too. UAE laws are considered rather liberal when compared to other Arab states this contributes to reason why foreign nationals find it easier to adapt to the rules of UAE compared to other Arab countries (Arab Laws World). Just like in any other nation, the UAE laws legally protect its people and its land through human rights, property rights and other legal rights. This includes the right to equality, liberty and the presumption of innocence in legal procedures (Arab Laws World). The United Arab Emirates’ federal law consists of laws that would regulate activities in various fields and activities of the federation and its Emirates, such as: Administrative Law, Public law, Agriculture law, Banking law, Civil law, Commentated laws, Commercial laws, Communications and Media law, Company law, Constitutional law, Criminal law, E- commerce law, energy law, Environmental law, Health law, Intellectual and Property law, Labor law, Law Sources, Litigation and Court Procedure, tax law and Transport and Maritime law (Lexadin, 2010). Today every nation in the world has participated in the global phenomenon of economic competitiveness. Since then investments, businesses and the world class competitive trade activities have sprouted everywhere in lieu of the economic market boom and has been an important tool in the global economic market. Economy as an integral part of the nation’s stability is an important matter. Within the context of this paper the federal law of UAE regarding business, economy and trade will be discussed since the United Arab Emirates are countries that have leaped remarkably in the global economic arena. The United Arab Emirates have continuously improved and developed its legal system regarding the economy such as business and trade in line with the national standards to be able to cope up outstandingly with the rest of the leading nations. The reason why despite the rapid pace of economic development and even turmoil, the UAE have improved and was able to adapt to modernization by constant improvement and changes that necessitates the federal legislative framework. Even until now the huge benefits of a healthy legislative environment for a prosperous economy is enjoyed by countries of the federation such as Abu Dhabi. Considerable attention is being devoted to the Emirate's local legal system which already guarantees investors a stable and safe atmosphere to invest their money (Abu Dhabi Government, 2012). In order to cope up with the ever changing economic market the United Arab Emirates within its constitution have amended the creation of government agencies to help the federation run its activities with much greater focus on different salient national fields, such as economy. To monitor and develop rules and regulations with regards to the federation’s economy the Department of Legal Affairs in the Ministry of Economy was created. This department is responsible for developing federal laws and legislations related to economy, commerce and investment. Amongst its tasks are the formulation of draft bills, amendments, ministerial resolutions, ministerial and administrative decisions and circulars related to economic and commercial activities in the country. The department likewise reviews Memoranda of Association and basic statute of private joint-stock companies, giving observations on agreements, treaties and resolutions regarding economic and trade agreements with foreign countries and other Arab nations (Abu Dhabi Government, 2012). Development of Business Laws The relevance of development of business laws is to ensure that businesses within the area of responsibility of the federation follow rules and abide by the regulations set by the federal state. This is to ensure that these businesses operate within the perspective of the legalities set via the federal laws. Especially now that the federation operates on free zones that have led to many businesses and investments who are owned by foreign nationals. Without the promulgation of the business laws basically the economic arena within the federal area will be turmoil since every person and every business entity will operate on the basis of their own rights regardless of others without clear boundaries of to what extent can be made (Abu Dhabi Government, 2012). Although developing and processing new laws involves series of procedures and discussions among the federal officials, the time devoted for such fuzzy process equates harmony in the general economic and social conditions of the country. So a significant amount of time, study and efforts is devoted into the development process of laws and legislations to ensure their compatibility and relevance to the economy of the country (Abu Dhabi Government, 2012). The proposition and passing any federal law is a winding and crucial process. When introducing any amendments to an existing law or preparing a new bill, The Ministry of Economy presents a memorandum seeking the permission of the cabinet. The cabinet studies carefully the proposal the afterwards authorizes the ministry to form the draft bill. The ministry then prepares a first draft of the bill which is shared with the competent authorities from local bodies or the private sector to discuss and collect their opinion and observations or publish it on the ministry's website before the final version of the bill is prepared (Abu Dhabi Government, 2012). After the draft proposal has been made and crucially studied the proposed bill is presented to the cabinet for approval. After which it is then forwarded to the Technical Committee for Legislation in the Ministry of Justice wherein legal experts study the draft bill from various aspects and make necessary modifications in coordination with the Ministry of Economy. The bill is then sent to the Ministerial Committee for Legislation which is composed of the Minister of Justice as Chairman and the Minister of State for FNC Affairs, the Minister of Social Affairs, the Minister of Finance, the Minister of Environment and Water and the Minister of Economy as members. These experienced and highly respected members of the committee review the law and makes necessary amendments in accordance with the policy orientation of the country (Abu Dhabi Government, 2012). After the committee's review, the bill goes to the cabinet for its review and approval and then to the Federal National Council for further discussion and approval. The Ministry of Presidential Affairs then scrutinizes the final version of the law and publishes it in the Official Gazette. The United Arab Emirates federal states as one of the leading economic victors in the Middle East have furnished its system over time and were able to survive the global economic turmoil due to its dynamic and versatile character. It has provided a supportive legal framework for businesses, both local and foreign alike, in line with their vision of leadership and deep conviction that an effective legal framework is one of the integral parts for a nation’s stability and it should also likewise be set with international standards to have a competitive and prosperous economy (Abu Dhabi Government, 2012). . The stability of the legal framework with regards to business is no doubt achieved by the United Arab Emirates and even until know the federation still continuously improve on their high standing. To have fair and equal chances in business the country has issued a number of laws related to the economy, trade and investment since its legal formation in 1971. Some of the laws that exist within the federal state of the United Arab Emirates with regards to business include the following federal laws promulgated through and approved by all the emirates: 1. Federal Law No. 5 of 1975 regarding the commercial register. 2. Federal Law No. 1 of 1979 regarding the organization of industry affairs and its amendments. 3. Federal Law No. 4 of 1979 concerning the suppression of fraud and deceit in commercial transactions 4. Federal Law No. 8 of 1980 regarding the regulation of labor relations and its amendments. 5. Federal Law No. 10 of 1980 concerning the Central Bank, the monetary system and the organization of the banking profession and its amendments. 6. Federal Law No. 18  of 1981 concerning the organization of commercial agencies 7. Federal Law No. 8 of 1984 on commercial companies and its amendments 8. Federal Law No. 37 of 1992 regarding the protection of trademarks and its amendments 9. Federal Law No. 18 of 1993 regarding commercial transactions 10. Federal Law No. 22 of 1995 regarding organization of the auditing profession and its amendments. 11. Federal Law No. 4 of 2000 regarding the Emirates Securities and Commodities Authority and Market 12. Federal Law No. 4 of 2002 regarding criminalization of money laundering. 13. Federal Law No. 7 of 2002 on copyrights and related rights. 14. Federal Law No. 17 of 2002 regarding organization and protection of industrial property 15. Federal Law No. 8 of 2004 regarding financial free zones. 16. Federal Law No. 24 of 2006 regarding consumer protection. 17. Federal Law No. 1 of 2006 concerning electronic transactions and commerce (Abu Dhabi Government, 2012). All these federal laws are directed that proper activities within the context of trade commerce and business is followed by all the people of the federation regardless of status. These are standards that are proposed, amended, concluded and deemed necessary so approved by the people of the federal state represented by their leaders to ensure that all people of the federation enjoys equality in all aspects of the government. References Abu Dhabi Government (2012). Business laws in the UAE. The Abu Dhabi e-government gateway. Retrieved from http://business.abudhabi.ae/egovPoolPortal_WAR/appmanager/ADeGP/Business?_nfpb=true&_pageLabel=p_business_homepage_hidenav&did=227594&lang=en Arab Laws World (n.d.). UAE laws. Retrieved from http://www.arablawsworld.com/uae-laws.php Gulf Law (2011). UAE: Country profile. Retrieved from http://gulf-law.com/uae_profile.html Latham & Watkins LLP (2011). Doing business in the United Arab Emirates. Retrieved from http://www.lw.com/upload/pubContent/_pdf/pub2783_1.PDF Lexadin Legal Site (2010). Legislation of United Arab Emirates. Retrieved from http://www.lexadin.nl/wlg/legis/nofr/oeur/lxweuae.htm UAE Ministry of State for Federal National Council Affairs (2012). Constitution of United Arab Emirates. Retrieved from http://www.mfnca.ae/?lang=en&m=options&act=content_detail&content_id=438 U.S. Department of State, Bureau on Near Eastern Affairs (2011). Background note: United Arab Emirates. Retrieved from http://www.state.gov/r/pa/ei/bgn/5444.htm Read More